The differentiation of mesenchymal cells into chondrocytes and osteoblasts and the formation of cartilage and bone matrices is directed by a complex series of processes, in which growth and differentiation factors play a role. Transforming growth factor-beta (TGF-beta) and several TGF-beta superfamily members have been isolated from bone matrix and are synthesized in a defined spatial and temporal pattern during osteogenesis in situ. TGF-beta family members also markedly affect the cellular matrix formation in vitro and mimic in vivo all or part of the osteoinductive activity of demineralized bone matrix, suggesting that these factors play crucial roles in regulating osteogenic differentiation. In this application, we propose to test several aspects of the hypothesis that the coordinated and perhaps sequential endogenous expression of various TGF-beta superfamily members and the resulting autocrine/paracrine effects drive the osteoblastic differentiation of mesenchymal cells into osteoblasts. We will first establish the expression pattern of TGF-beta related factors during osteoblastic differentiation in vitro of multipotential mesenchymal stem cell lines (the cell lines C26 and 10T1/2) and will then determine whether the differentiation can be predictably altered by either overexpressing or inhibiting the expression of individual TGF-beta family genes. We have already established that retinoic acid-induced initiation of osteoblastic differentiation in these cells results in a drastic increase of TGF-beta expression and a transient decrease of bone morphogenic proteins (BMP)-2 and -4 mRNA. Thus, we will focus our functional studies on the overexpression and the inhibition of expression of TGF-beta and BMP-2/4 and evaluate the effects of these modifications on the differentiation potential and the osteogenic differentiation of these cells in vitro and in vivo. In Aim 1 we will complete the characterization of the expression pattern of TGF-beta related factors in the two model systems, especially under conditions that induce osteogenic differentiation. We will relate these changes to the differentiation state and differentiation parameters under various culture conditions. In Aim 2 we will increase and abolish the endogenous TGF-beta expression by transfection with expression vectors for TGF-beta2 or a dominant negative TGF-beta mutant. The effects on cell differentiation should establish whether osteogenic differentiation can be initiated, accelerated or modulated by alterations of the endogenous TGF-beta expression levels and whether TGF-beta expression is essential for osteogenic differentiation. In Aim 3 we will overexpress BMP-4 and abolish endogenous BMP-2/-4 synthesis and evaluate the consequences on cell differentiation. These results should establish whether osteogenic differentiation can be modified by altering the endogenous BMP-2/-4 level expression levels and should determine how essential BMP-2/-4 synthesis is for the osteogenic differentiation of these mesenchymal cells.